The insurance firm Aviva will pay no executive bonuses this year and is freezing pay for senior management after crashing into the red with a £3.1bn loss after tax.

The company also reduced its full-year dividend by 27%, sending the shares down by 15% in early trading on Thursday, and wiping more than £1.5bn off its stock market value.

After selling a string of businesses, Aviva said cashflows from the remaining assets could not sustain the dividend. Mark Wilson, who took over as chief executive in December, said: "It's like walking up an escalator that is going down; today we have stopped the escalator." He said the company intended to increase the dividend over time, with reference to cash flow and earnings.

He said the pay decision had been made after discussions with Aviva's shareholders. "We've had continuing and ongoing and appropriate discussions with investors on pay. The reason is simple, it's a tough economic market. Given our results it was not appropriate that we pay bonuses to our executives, or pay rises to the top 400 people in the group."

The company said it would not claw back bonuses previously awarded. Wilson said: "When it comes to bonuses, it has to be looked at in terms of legal obligations."

Aviva made about 2,500 job cuts in 2012 and there may be more to come this year. Wilson said: "Undoubtedly there may be some. It's not like last year. We have more expense reduction to go. The next round is on things like insolvency costs, IT costs, real estate costs."

An activist group of existing and former policyholders, the Norwich Union Policyholders' Action Group (NUPAG), said on Thursday: "[The] results suggest that at the end of 2011 some balance sheet values were massively overstated."

He said the immediate issues facing the insurer have been addressed. "We now need to take Aviva to the next stage of its turnaround. The insurance sector has made an industry out of complexity. We need to be simple and as predictable as a Swiss clock. That is my promise."